I must say this is a statement/question that a lot of us (realtors) are hearing lately. This is also a question that a lot of you potential buyers have been saying lately. Many of you have probably put in several offers, only to have been outbid, sometimes severely. It can take the wind out of your sails and make you feel that the market is just out to get you. Maybe accomplishing your lifelong dream of home ownership is simply “not meant to be”. I say forget that. You can still become a homeowner, stop paying rent and paint the walls whatever color you want.

The first thing I think you should do….. shorten up your wishlist. In the beginning of my career I used to make the mistake of asking young couples to explain to me what they’re looking for. 90% of the time they would start listing all these things they want, going on and on about their dream home. My gut reaction is “that’s not going to happen”. Of course I didn’t have the courage to say that back then. I would just let them figure it out for themselves over a grueling 3 month process. However, it is possible and sometimes easy to shorten up a wishlist. A lot of times not getting something that you thought you initially thought you had to have isn’t that big of a deal. That fourth bedroom isn’t that bad when the house has a den or a living room and a family room. Sometimes deciding to purchase a home with a little bit less square footage isn’t that big of a deal if the house has an open and flowing floor plan. What if you really wanted a great view? Guess what? Everyone wants a great view, but they come with a cost, usually a very high one.

The way the market is right now, with multiple offers and very low inventory if you’re not aggressive you’re going to get priced right out of the market. This may have already happened to you. Locational differences are probably the most cost sensitive. What if you really wanted a 2 bedroom 1 bath in Westwood Knolls. You may be able to get a bigger house at the same price in San Mateo Village or Sunnybrae. If you have more than 20% to put down, consider buying something that needs a little bit of work. A little bit of elbow grease can go a long way in do-it yourself style work. It’s also a way for you to customize the home yourself and gain more of a connection with it. Keep your eyes out and be open to other options. It’s better to buy real estate and wait, then it is to wait to buy real estate.

Interest rates have also been so low for so long now, that people have almost gotten used to them and now think they’re the norm. If these rates start to slowly rise a lot of people are going to be upset that they didn’t pull the trigger when they had the chance. All I’m saying is that the people who are successfully purchasing homes right now are the ones that are willing to make a few sacrifices and pay for what they want. I believe that in the long run these people will be glad they did it.

In the month of October San Mateo Police reported 12 burglaries in the Shoreview Neighborhood of San Mateo. During this run of thefts residents reported missing electronics and jewelery, items that can be sold for quick cash. Residents also reported that the occurences took place during weekdays. These burglaries caused San Mateo Police to issue a statement warning local residents of what was going on.

The statement didn’t seem to deter the intruders. Just last week the San Mateo Police Department reported that 7 burglaries indeed occured in the city. Reports indicate that burglars have been dressing up as either utility workers or salespeople and knocking on doors looking for houses where no residents are home. They then enter through either a window or an unlocked door to begin their mischief.

Locking your doors and windows is not enough. If you see suspicious behavior in the community be sure to call police. Police are currently on alert and are encouraging residents to call them if they see anything “out of the ordinary”.

San Mateo is not the only place where burglary is running rampant. Several reports of burglaries have taken place in San Carlos and Belmont. Three arrests were made in September (two being under the age of 18), but it seems that the crimes have continued. If you notice any suspicious activity call the local authorities.

Back in 2001’ FEMA finalized a flood insurance study that would place several San Mateo Neighborhoods into a “special flood hazard area”. Due to this distinction lenders would require homeowners to obtain flood insurance.

As a result of the approximately $7M levee project, the areas of South Shoreview, Sunnybrae, Parkside and 19th Avenue Park have been changed from “High Risk” to “low risk” areas. If you live in these areas you are no longer required to pay for flood insurance and you basically have two options. You can convert your policy to an optional “Preferred Risk Policy”. If you elect to do this your mortgage company doesn’t have to be involved, and this is just for your peace of mind in the event of a random flood. Your second option is to apply for a “full refund” and carry no flood insurance. Before electing to do this be sure that you understand your risks of being uninsured. Your insurance agent should definitely be contacted to explain the details and help with the documentation.

Some San Mateo Homeowners will notice that they’re still located in FEMA “high risk flood areas”. These areas include North Shoreview and North Central Shoreview. If you live in these areas you may be asking yourself “Why do I still have to pay for the insurance?” The areas of Shoreview that are south of 3rd Avenue basically paid for the Levee Project. The money was collected through the property tax bills of the homeowners south of 3rd Avenue in San Mateo. To complete a similar levee project to protect the areas in North Shoreview and North Central Shoreview it would likely cost between $21,000,000-$28,000,000. There’s simply not enough homes north of 3rd Avenue to be able to pay for such a project.

Be advised that I’m not recommending any action and that you should contact your insurance agent before making any changes to your existing flood insurance policy.

Why San Mateo Village is the best first time homebuyer neighborhood in the County!

The city of San Mateo has the best “first time homebuyer” neighborhood on the Peninsula. Just south of Hillsdale Boulevard, west of Freeway 101 and east of El Camino lies “San Mateo Village”. With most of theses “starter” homes being built between 1945 and 1953 the subdivision of San Mateo Village has grown into a very charming neighborhood that epitomizes suburban living. With George Hall Elementary School right in the center of the neighborhood, this is truly a community where children comfortably roam the streets and friendly neighbors are always willing to extend a helping hand.

At the time this post is being written the Median home sales price for the year is $695,000.

Advantages:

-Majority of the homes are well maintained, one story, California Ranch Style properties.

-The large majority of the homes are between 1,000-2,000 square feet.

-There is very light traffic throughout the Village with no main city thoroughfares.

-Walking distance to Casanova/Laurie Meadows Park to the south.

-Good sized 5,000-7,000 square foot FLAT/USEABLE lots.

-No condominiums inside “The Village”.

-Very low population density; the only multi-family or apartment buildings are on the perimeter of “The Village” near the railroad tracks to the west or Freeway 101 to the east.

-George Hall Elementary receives a www.greatschools.org rating of 4 out of 5 with improving Academic Performance Index scores. In 2011 George Hall Elementary had an API score of 834 with a 13 point improvement from the prior year.

Disadvantages:

-Not within walking distance to downtown.

-Some freeway noise from Freeway 101.

-Some railroad noise from Caltrains.

***This post was written on October 26, 2012. There are currently no active listings inside San Mateo Village. If you’re interested in purchasing in San Mateo Village please contact me to inquire about an “off market listing”.

Due to the lack of inventory, and high demand for San Mateo real estate, multiple offers are very prevalent in the market right now. It will take a compelling offer to find its way into the acceptance circle.

Many sellers and listing agents are looking for more than just price. They’re also comparing the best terms, and of course the commitment of the prospective buyers. These three items are what’s going to win or lose the home. Make sure that you follow these basic rules and you can start packing.

Most listing agents know that if a home “falls out of contract” after an accepted offer, they’re going to lose a lot of the momentum that the home had when it first hit the market. They really want to avoid losing this valuable momentum. Make sure that you and your agent make it abundantly clear that you really WANT the property, and that you’re committed to closing on time. There’s a few ways you can do this. First, keep your contingencies SHORT. If you have a property condition contingency, do you really need more than three or four days if there’s something further you need to investigate? You shouldn’t. Get your inspectors/contractors out there quickly and don’t delay! If the home has all the necessary disclosures/reports and there are no red flags, consider not putting any property condition contingency in the contract at all (but make sure you always do your homework). If you are going to be obtaining new financing to purchase the home (which most of us do) make sure that you already have bank approval. Find a mortgage broker that can be very aggressive with a financing contingency. You should try not to put the standard 17 days on the CAR purchase agreement. This makes your offer look weak! You will lead the seller to believe you may not be able to get the loan. The less days the better, but make sure your mortgage broker can meet specifications, otherwise you’re going to have to ask for an extension and you don’t want that either.

Put a full 3% deposit, this goes without saying, anything less shows a lack of commitment.

Have your agent present the offer in person. Especially if your agent doesn’t have a personal relationship with the listing agent. Sometimes a buyers agent will even have the opportunity to present the offer to the sellers themselves. A little tip: when referring to an offer with a seller, don’t call it an “offer” call it a “proposal”. Sales studies have shown that it sounds better, and an “offer” implies that you’re not giving them exactly what they want. Get there in person and have him/her explain who YOU (the buyers) are, why they love the home and how many homes they’ve seen (you’re not buying the first home you saw are you)? Make sure you’ve seen the inventory, and know how the listing stacks up. In our business building rapport never gets old. The more rapport your agent (and you) can build with the listing agent and seller, the more likely they’ll accept your offer.

Be prepared to open escrow and order the appraisal right away. Sellers love proactive buyers. There’s no better way to get things moving. Of course… if you can, offer a short close date. Less than 30 days is good. Make sure your agent and everyone else involved; title company, mortgage broker, the family and your agent are all on board and ready to move!

Put down 20% as an initial investment in your new home. It’s easier to get loans that are 80% loan to value. It shows that you have saved money and are ready to invest in your new lifestyle. I’ve seen with my clients many times when they’ve had 10% or 15%, once they tell the family that they’re going to “pull the trigger” and become homeowners the remaining down payment suddenly appears. and they have their 20% down payment. You will likely get a better interest rate and it will pay off in the long run even if you have to “borrow” money from family or friends. Many times mom and dad will let you borrow money with 0% interest :)

We’ve talked about terms and commitment, now here’s the biggie… PRICE! Yes, it’s no surprise that the price offered is going to be critical to the seller. Make sure you and your agent review recent comparable sales data. Sometimes in a multiple offer situation prices can quickly get inflated. Have an appraisal contingency in your offer if the home is difficult to “comp out”. Of course the less contingencies, the more appealing the “proposal” looks to the seller, but you always have to protect yourself as well. Make sure that you know what you think the home is worth, and what you’re willing to pay for it. If things get crazy due to multiple offers, stick to your guns! Don’t offer more than you think it’s worth, let someone else pay too much for it and you can wait for the next one.

Keep terms, commitment and price as competitive as possible. If you’re lacking in one area, try and boost up one of the other areas. Multiple offers are going to be here to stay for at least the next 8-10 months.

I’m always willing to help you with your research, diligence, and offers. Let me know if there’s anything I can do to help.

Any expense that does not have a tax deductible feature to it has an inherent higher after tax cost. Let’s break this down slowly.

Any expense that does not have a tax deductible feature to it…

Your mortgage interest IS a deduction, your rent isn’t. Your car payment isn’t a deduction unless you own your own business, or are an outside sales person. The clothes you buy, unless a uniform for work, is not a deduction. The dining out, the vacations the DVD surround sound…. all not tax deductible; unless of course you are a rock star who needs to sample other peoples music while traveling to exotic locales, while paying for your band manager and fans dinner. Even then, you can only write off a portion of your travel and meals expenses. Let’s look at the next part of the sentence:… “has an inherent higher after tax cost.”

Remember last week, we looked at the cost of rent. We concluded that in order to pay a monthly rent of $2,000 per month, we needed to have gross earnings (before taxes) of $3,125 per month. Therefore, the true cost of the rent was $3,125. Likewise, if you purchase an automobile that costs you $500 per month, you will need to earn, on average, $833 gross income to net the $500 for your car payment. How about the latest Plasma TV catching your attention as you walk through Best Buy? It only costs $1,999 right? Wrong… with sales tax, the total would be $2,158 and you would have to earn $3,598 in gross income to net the $2,000. I get a quesy feeling in my stomach when I think about having to earn taxable income to pay for sales tax; seems redundant. For the reasons explained above, many people start small businesses. Although, the small business allows more deductions than normal, it’s not foolproof and expenses can be audited, so contact your accountant for the details.

Now that you’re aware of the tax implications of buying goods and services, what can you do? Simply put, you want to minimize taxes. For every dollar you can deduct, you get a 40% return on your money. (Using a combined state and federal tax rate of 40% you would save 40% on your money by not having to pay taxes). First, if you have a 401k you should be contributing as much as allowable, at the very minimum; you should be contributing as much as your employer will match. If you are eligible you should contribute to an IRA and if you don’t have the money this year… start saving for next year. If you have some consumer debt from credit cards or auto loans, consider taking out a 2nd mortgage equity line of credit and paying these off. At the very least you will convert non-deductible interest into deductible interest. If you vacation to the same location frequently consider buying a vacation home. Tax laws allow you to write off interest on up to 1 million dollars of mortgage debt. If you have a child in college that you are assisting in their rent, possibly buying a small condominium as a rental property instead would add some deductibility to an otherwise draining expense. Think legally, but think creatively.

Am I implying you should only buy tax-deductible girl scout cookies or other goods and services, which are tax deductible?… No… I’m only trying to make you aware of the REAL costs of what you are buying. Remember, there are only two things that are for certain in this life: Death and Taxes!

OK… we’ve all paid our taxes a few months ago, and most of us probably aren’t thinking about having to pay them until April 2013′. But don’t forget that it is still real estate season, everyone is home now from 4th of July vacations and some of you may have used your tax refund to finance your last vacation. I’m going to spend this blog post discussing the true costs of not only renting, but later, the true costs of paying for anything that is not tax deductible.

Home prices in the bay area are one of the highest in the nation. Rents in the bay area are also some of the highest in the country. Making the decision to buy or to rent can be difficult, but understanding the true costs of renting may help.

If you are paying rent, you need to clearly understand how much money you potentially can be throwing away. For every $1.00 you pay in rent you’re actually paying $1.40. That doesn’t sound right, does it? Let me explain…

Suppose you are paying $1,500 per month in rent. Your rent is not a tax deduction. In order to have a take home (net) amount of $1,500 out of your paycheck you would need to make a (gross) amount of $2,343. Once you earned the $2,343 gross income the government takes about 36% of that amount ($843) leaving you with $1,500 to pay your rent. Look at the comparisons below:

TO PAY A RENT OF: YOU NEED TO MAKE:

(net) (gross)

$1,600.00 $2,500.00

$1,700.00 $2,656.25

$1,800.00 $2,812.50

$1,900.00 $2,968.75

$2,000.00 $3,125.00

So the next time you write a rent check, you’ll understand the amount you’re writing doesn’t quite represent the TRUE cost of renting, considering the tax implications. In addition, rent is paid month in and month out- there is no ending date. Your landlord won’t call you up one day and say “thanks for paying my mortgage for the last 30 years… I’ll let you stay here free now.

HOMEOWNERSHIP IS A DIFFERENT EXPERIENCE:

The majority of the mortgage payment you make is tax deductible, saving you thousands of dollars each year in taxes. A portion of your mortgage payment actually goes toward reducing what you owe on the home- allowing you to own your home free and clear one day.

While you’re paying a tax deductible, debt-reducing payment you’ll be enjoying equity appreciation of your property that many Bay Area Homeowners have seen consistently long term. If you have any questions or comments, you can email me Kevin@realsmartgroup.com or call my cell phone (415)283-7919.